Brexit – a Cautionary Tale

The date is Friday January 27. UK Prime Minister Theresa May is in Washington DC, where Donald Trump is promising Britain a “tremendous” free trade agreement with the US. Soon to be free of its EU bindings following the Brexit referendum, ‘Global Britain’ leaves the sinking continent and takes a first bold step towards building new trade ties with the world’s most dynamic economies.

“Yo May!”, says the new President. “What can I do for you?”May: We’d like you to do a free trade agreement, just with us.Trump: Be my guest! Anything that sticks it to the French and Germans, ma’am, and helps bring the EU crashing to the floor. I never liked that organization. They always answer back when we tell them what to do. We’ll give you a special deal in honour of the special relationship! I’ve instructed my officials to work 24/7 towards the best possible outcome. Trust me, it’ll be tremendous. Trust me. Now if you don’t mind, I’ll leave you in the capable hands of my new US Trade Representative.Trump leaves.

USTR: One small question, Madame Prime Minister: how many inhabitants does the UK have?May: 64 million!USTR: We have 319 million. What is your GDP?May: $2.7 trillion a year.USTR: Hmmm. Ours is $19 trillion. That’s seven times higher. What kind of trade deal would you like?May: Removal of all tariffs and non-tariff barriers to all goods and services, mutual recognition of all standards and product approval procedures, and the removal of all sanitary and phyto-sanitary barriers to trade in agriculture between our two countries.USTR: Sounds promising, although you already get most of that through the EU. What would you like us to give you in return?May: I beg your pardon?USTR: That’s what you give us. What do we give you?May: The same of course.USTR: You mean free access to 64 million Americans?May: Well no, all of them.USTR: That’s not really a balanced deal, is it?May: But it’s a free trade deal.USTR: Free trade is relative, ma’am. To borrow from your very own George Orwell, “all FTAs are free, but some are more free than others…” What you are proposing is not a fair trade deal, is it? We need equivalent access and you can’t give it, you’re too small. Tell you what: we’ll give you full access to California and Texas. They have about 66 million inhabitants between them.May: Don’t you believe in free trade after all?USTR: We’ll add one more state if you stop subsidizing your farmers once you’ve left the EU’s Common Agricultural Policy. Our farmers can keep their subsidies of course.May: This is ridiculous.USTR: Actually we’ll throw in another small state if you get Brussels to stop bashing us for letting NASA and the Pentagon subsidise Boeing at Airbus’s expense. ..oh I forgot, you’re leaving the EU.May: I thought you believed in market economics.USTR: We do. The bigger the market, the better! Like the single European market, which you’re leaving.May: Don’t underestimate us! Once we’ve left the EU we’ll be a separate member of the WTO, so we can take dispute settlement procedures against you.USTR: I’m quaking in my cowboy boots. Even if you win a case – which will take several years – how will you punish us?May: We’ll deprive you of access to our market!USTR: Is that the one with 64 million inhabitants? That soggy little island of the three Bs – Burberry, the Beatles and Benedict Cumberbatch? Excuse me, I have a call from an altogether bigger B – Brussels – and I don’t want to keep them waiting. I also have a queue of lobbyists on hold. They’ve heard you’re in town and want to make sure an FTA with Great Britain doesn’t create unwanted competition and cause their clients to lose any jobs, so we’ll have to insert a clause into the FTA which stops that happening.May: This is preposterous!USTR: Actually I’ve just had a brainwave. There is a way we could give you full access to our market after all. No tariffs, no taxes, no nothing.May: I knew the special relationship would shine through in the end!USTR: But there’s a condition: British companies must relocate their factories to the United States. Now that really would be a TREMENDOUS deal!